Thursday, March 18, 2010

The American Lawyer enters the realm of meta-legal practice with the question: how much can you bill to bill?

"Fifteen law firms have billed the Lehman Brothers estate more than $300 million in total fees and expenses since Lehman filed for bankruptcy in September 2008. By almost any standard, that's a lot of money. But the cash pouring in hasn't stopped the key firms involved from protesting aggressively when the fee committee monitoring the case moves to slash their bills, even if the proposed cuts amount to a fraction of a percent of the firms' total requested fees."

While some of the fat trimmed from the bills has been due to lawyers flying first class instead of economy, quite a chunk of it is due to the cost of preparing bills. For example, Jones Day submitted a 700 page fee claim that cost $122,000 to compile.

The law firms involved are bucking against the committee's cap of one per cent of the total bill. They claim that courts typically allow between 2.5 and 5 per cent.

It's good that the committee is investigating these claims rigorously. For many years lawyers and law firms have expected their bills to be paid without question--a form of lese majeste.

This degree of openness has yet to be transplanted to the UK where bills are applauded even. Slaughter and May billed the UK government £33 million for work on RBS, Northern Rock, etc. We don't know the contents of that fee note, however.

As long as hourly billing rules then these fights will continue. And the lawyers will appear greedy and trough-sniffing, regardless of the merits. I wonder what it will take to make them innovate and change?